Authored By: Priyanka Ghosh
KIIT University
- Introduction
The convention model of criminal law rests on simple story: an offender acts, and an identifiable victim suffers a direct, often immediate injury that property is taken, a body is hurt, a specific person is deceived out of a specific sum. Sentence practice, procedural design and public institutions about justice are largely organized around the figure of the singular victim, whose loss can be named and pointed to as proof that a wrong occurred.
White collar crime unsettles this picture. Edwin Sutherland’s founding definition described it as crime committed by a person of respectability and high social status in the course of their described it occupation[1] and what distinguishes these offences is less who commits them than how their harm is felt. A falsified balance sheet, a diverted pension fund or a scheme to launder proceeds through shell companies rarely proceeds one immediately visible casualty. The harm is typically deferred, distributed across thousand of unconnected people, or absorbed first by an institution before it ever reaches, if it visibly reaches at all, maybe a particular person.
This creates a genuine conceptual problem: if criminal law’s claim to seriousness has traditionally rested on a visible victim, what happens to that claim when the victim is diffuse, institutionalism, or statistical? This article argues that the absence of a conventional victim does not diminish the seriousness of white-collar crime. It instead exposes a gap between a doctrinal architecture still organized around individualized harm and the collective, systemic nature of harm such crime actually produces a gap in how harm is measured and in how accountability is assigned.
- Who is the victim of white-collar crime?
Before asking whether white-collar crime lacks a victim, it is worth mapping who might occupy that role because the answer is rarely singular. Individual victims exist in many such offences, a depositor whose savings vanish in a cooperative bank’s collapse, a small investor misled by a fraudulent prospectus, an employee whose provident fund contributes, are diverted. Their loss is concrete, even where it is less visible than a physical injury.
Corporations and shareholders can themselves be victim rather than mere vehicles of crime, as when as a director siphons company funds or an employee commits embezzlement. Consumers from another class, injured collectively through mis-selling or deceptive financial products, where each person’s loss may be small but the practice is repeated across a customer base of millions. Financial institutions are routinely victims of loan fraud and willful default, absorbing losses eventually socialized through tighter provisioning, costlier lending or in extreme cases, public bailout.
The state and public exchequer are victims when white-collar crime takes the form of tax evasion or corruption in procurement, the loss is diminished capacity to fund public goods, felt by citizens generally rather by any one of them specifically. Finally, the wider economy and public confidence in markets can be harmed even where no single transaction is traceable to single loser: a securities scandal that shakes retail investor confidence imposes a cost on the efficient functioning of capital markets that outlives the scandal itself.
- The problem of diffuse harm
The central analytical difficulty is that white collar crime harm often fails the visibility criminal law implicitly applies to violent or predatory offences. In an assault or theft, harm is contemporaneous with the act and legible to an observer. In white-collar crime, harm is frequently displaced in time: a Ponzi scheme may run for run for years, paying early investors from the contribution of later one, so that the crime long proceeds any visible victimization and the eventual collapse merely reveals losses incurred silently throughout. Harm is also numerically diffuse. A marginally overcharged fee embedded in a financial product or a slightly manipulated and benchmark rate, may cost affected person. This produces an aggression problem: the harm is substantial in total, yet each individual instance looks insignificant enough that no single victim has the incentive, information, or standing to treat it as a crime rather than a minor inconvenience.
Corporations and shareholders can call themselves rather than mere vehicles of crime, as when a director siphons company funds or any employee commits embezzlement. Consumers form another class, injured collectively through mis-selling or deceptive financial products, where each person’s loss eventually socialized through provisioning, costlier lending or in extreme cases, public bailout. The state and public exchequer are victims when white-collar crime takes the form of tax evasion or corruption in procurement. Finally, the wider economy and public confidence in markets can be harmed even when no single transaction is traceable to a single loser.
- Does the absence of a conventional victim reduce criminality?
It might be tempting to conclude that where the harm cannot be pinned to an individual, the offence is correspondingly less serious, closer to a regulatory infraction than a crime proper. This conclusion should be resisted.
First, criminal law already protects collective and institutional interests without requiring an identifiable individual victim. Offences against public order, environmental crimes and offences against state all proceed on the understanding that some interests, clean air, public safety, the fairness of elections are worth protecting through criminal law precisely because they are collective goods that no private individual can vindicate through a civil claim alone. White collar crimes that damages institutional trust or market integrity fits within this established tradition, it requires no new category of protected interested, only the recognition that economic offences belong within one that already exists.
Second, conflating the difficulty of qualifying harm with the absence of harm is a category error. Harm to market integrity or to the future prospects of thousands of small investors is genuinely hard to reduce to a single figure, but so is harm from offences the law already treats seriously, including environmental degradation. Difficulty of measurement is a challenge for sentencing and remedy design; it is not a reason to discount the underlying wrong.
- The Indian legal framework
Indian law displays this tension quite clearly: some provisions retain a strict individualized, transaction-based model of harm, while others have already moved towards recognizing collective and institutional injury as sufficient grounds for serious criminal liability.
The core “ordinary crime” provisions remain transaction-based. Cheating, long known by its old numbering as ‘section 420’ and now codified as section 318 of Bhartiya Nyaya Sanhita, 2023 and criminal breach of trust, consolidated under section 316 of the same code, are both built around a specific relationship between an identifier deceiver and an identifiable person induced or entrusted. Both are routinely applied to white-collar conduct, but their architecture presumes a traceable transaction and a person on the other end of it, precisely the structure that diffuse, aggregated harm does not nearly fit into. Elsewhere, the law has already moved past this mode. Section 447 of Companies act, 2013 defines “fraud” to include any act intended to deceive or injure not only an individual but the “the company or its shareholder or its creditors or any other person”, deliberately widening the protected class beyond a complainant.[2] The Prevention of money laundering act goes a step further, its offence does not require any identifiable person to have been deceived in a specific transaction at all, the wrong lies in dealing with the proceeds of crime in a way that threatens the financial system’s integrity.
Corporate criminal liability reveals a similar tension. In Standard Chartered bank v. Directorate of Enforcement, the Supreme court held that companies could be prosecuted even for offences carrying punishment of mandatory imprisonment, recognizing that juristic persons can bear liability through their alter ego. [3]However, in Sunil Bharti Mittal v. CBI, the court clarified that director are not automatically vicariously liable for corporate offences merely because of their position.[4] Thus, the law holds institutions accountable for diffuse wrongdoing, while making individual attribution considerably harder.
- The accountability gaps
The muted legal response to white-collar crime stems from structural flaws and not doctrine alone. Societal perception routes elite misconduct into civil channels while corporate structures intentionally or naturally diffuse decision making, masking individual capability. This structural diffusion directly collides with strict legal standards like Sunil Bharati Mittal rule, which demands individual intent for criminal liability, subtle allowance to let go corporate wrongs to unpunished, where no single mind can pin. Compounding this, unravelling complex corporate frauds requires slow and forensic investigation.
This creates systematic impunity loop. While conventional law enforcement easily targets visible, single actor offences, corporate bad actors hide behind institutional and procedural delays. Ultimately, the law fails not because white-collar crime is victimless or harmless but an outdated legal framework is ill-equipped to confront modern institutional power.
- Rethinking the state of victimhood
Criminal law is traditional, transaction-focused model of victimhood is inadequate for capturing the broad harm caused by white-collar crime. While Indian acts like Companies act, PMLA, or securities laws already recognize class interest, system integrity, and collective protection, remain applied unevenly. To bridge this gap, the legal architecture must consistently accommodate collectively, institutional and systematic victims. At sentencing, courts should evaluate aggregate harm across an entire group as an aggravating factor, rather than gauging severity solely by the largest individual loss. Furthermore, remedies must evolve beyond traditional restitution by implementing structured schemes that distribute recovered proceeds proportionately among all affected victims.
- Conclusion
White-collar crimes lack a conventional victim whose immediate, visible injury easily anchors a criminal case, but this absence does not mean harm is absent. Instead, damages are distributed across thousands of small individual losses, absorbed by institutions or manifested as eroded trust in public and financial systems, addressing white-collar crimes offense requires criminal law to expand its vision beyond the isolated individual victim. By integrating well-defined categories for collective, institutional and systemic victims alongside standard evidentiary, procedural and sentencing mechanisms, the legal system can effectively adapt to evaluate and prosecute the true, modern scale of financial crime. Ultimately, expanding this perspective does not require displacing the traditional individual victim or lowering the standard of criminal proof, rather it demands that the legal system adapt its procedural tools to reflect the actual nature of complex financial misconduct.
Reference(S):
[1] Edwin H Sutherland, White Collar crime (Dryden Press 1949) 9
[2] Companies Act 2013, s 447
[3] Standard Chartered Bank v Directorate of Enforcement (2005) 4 SCC 530
[4] Sunil Bharti Mittal v Central Bureau of Investigation (2015) 4 SCC 609
